News Release
Intelsat Reports Second Quarter 2013 Results
-
Revenue of
$654 million up 2% vs. Q2 2012 on growth from network services and media customer sets -
Net loss attributable to
Intelsat S.A. of$408 million includes pre-tax charges of$367 million for early extinguishment of debt and$78 million of one-time, pre-tax expenses related to April IPO -
Total debt reduced by
$497 million as compared toDecember 31, 2012 -
$10.4 billion contracted backlog provides visibility for future revenue and cash flow
“The Intelsat team is executing against our operational priorities for 2013. New business on video neighborhood satellites and on our broadband mobility infrastructure is driving on-network revenue growth in our network services and media businesses. Declines in our government business, due to the U.S. government budget sequestration and troop drawdowns, were reflected primarily in off-network revenues. Overall, revenue and Adjusted EBITDA grew at two percent and four percent, respectively, as compared to the second quarter of 2012.”
McGlade continued, “During the quarter, we furthered our commitment to
our next-generation fleet design, announcing manufacturing commitments
for four additional satellites to be deployed over the coming years as
we replace existing satellites with the innovative, high-throughput and
cost-efficient Intelsat EpicNG platform. Leading up to the
launch of those satellites, we are working with strategic customers to
create portfolios of services on the current fleet that satisfy today's
requirements while providing a bridge to our customers’ future growth
needs on EpicNG.
Business Highlights
-
Intelsat’s network services business, which provides broadband
infrastructure for fixed and wireless telecommunications and
enterprise and mobility applications, accounted for 46 percent of
Intelsat’s total second quarter 2013 revenue, and at
$303.7 million was up four percent as compared to the second quarter 2012. In the second quarter 2013, growth in transponder and managed services revenue for wireless telecommunications, mobility and enterprise applications was offset by reduced revenue from channel services, which has been declining due to migration to fiber.-
Enterprise data networks use
Intelsat satellites to deliver broadband connectivity across multiple regions or to remote locations. In the second quarter,Harris CapRock Communications , the leading global provider of managed communications solutions for remote and harsh environments, extended its portfolio withIntelsat under a long-term agreement covering new and renewed capacity of over 600 MHz on up to five satellites. The agreement will allow Harris CapRock to provide broadband services to its energy customers in theAmericas ,Africa and theAsia-Pacific region while driving increased control and efficiency in its operations, with the potential for migration to next generation satellites. -
In the
Middle East ,Saudi Telecommunication Company (STC), a provider of integrated mobile, fixed and broadband communications services, recently renewed its agreement withIntelsat . STC plans to provide VSAT services to its oil and gas customers in theMiddle East onIntelsat 10-02 as part of a multi-year, multi-transponder agreement. -
Separately,
Riyadh -based Saudi Inteltec Skyband renewed its contract for advanced VSAT services onIntelsat 15 to customers inSaudi Arabia .
-
A global leader in broadband services recently contracted for new,
multi-transponder services on
Intelsat 905 to provide commercial aeronautical services overEurope . -
Astrium Services, Europe’s leading space technology company,
recently renewed its contract with
Intelsat for the delivery of advanced broadband services to maritime customers on theNorth Sea . As part of the agreement, Astrium will use multiple transponders on theIntelsat 907 satellite, delivering seamless connectivity to its shipping customers.
-
Santiago -based Entel Chile, a leading telecommunications provider inChile , recently signed a new agreement onIntelsat 23. EntelChile will provide mobile broadband and telephony services to customers in remote areas ofChile , includingEaster Island , off the coast ofSouth America .
-
Enterprise data networks use
-
Intelsat’s media business, which provides satellite capacity for the
transmission of entertainment, news, sports and educational
programming for approximately 300 broadcasters, content providers and
direct-to-home (“DTH”) platform operators worldwide, accounted for 34
percent of our revenue for the quarter ended
June 30, 2013 . Second quarter revenue of$220.5 million increased four percent as compared to the second quarter of 2012, as service volume increased for DTH and cable and broadcast program distribution applications.
Contracts with media customers in the second quarter included:-
A major South African broadcaster recently renewed and expanded
its multi-transponder agreement on
Intelsat 20 to support media applications inAfrica . -
Separately,
Moscow -based Orion Express, a major satellite television provider inRussia , recently expanded its relationship withIntelsat , signing multi-year commitments for several transponders on Horizons 2 at 85º East. Orion Express will use the capacity to expand its delivery of DTH services to customers acrossRussia , as well as to offer television content delivery services for broadcasters. -
DIRECTV Sports recently renewed its contract for services via Galaxy 17. The programmer uses the satellite’s premier video neighborhood to deliver its suite of regional sports programming to customers inNorth America .
-
A major South African broadcaster recently renewed and expanded
its multi-transponder agreement on
-
Intelsat’s government business, which provides highly customized,
secure commercial satellite-based solutions to civilian agencies and
the U.S. military defense sector, accounted for 19 percent of our
revenue for the quarter ended
June 30, 2013 . Second quarter revenue of$122.4 million decreased two percent as compared to second quarter 2012 results, as declines in lower-margin off-network revenue more than offset increases in on-network transponder services revenue from the second quarter 2012 entry into service of a payload hosted for the Australia Defence Force and increased sales of managed services in support of aeronautical applications inAsia .- Intelsat General was awarded a new agreement to provide services on Galaxy 18. The multi-year agreement will support a ground network for the U.S. government.
With respect to the effects of sequestration, the pace of RFP issuance and awards remains slower than usual and customers continue to renew and fund contracts on shorter terms than typical and consolidate services where possible. Visibility remains limited for the government business for the balance of the 2013 fiscal year and into 2014.
-
In the second quarter of 2013,
Intelsat completed a number of capital markets activities.-
In
April 2013 , our subsidiaryIntelsat (Luxembourg) S.A. (“Intelsat Luxembourg”) issued$500.0 million aggregate principal amount of 6¾% senior notes due 2018,$2.0 billion aggregate principal amount of 7¾% senior notes due 2021 and$1.0 billion aggregate principal amount of 81/8% senior notes due 2023 (collectively, the “Intelsat Luxembourg Offerings”). -
Also in
April 2013 , we used the proceeds from the April Intelsat Luxembourg Offerings to redeem all$2.5 billion aggregate principal amount of Intelsat Luxembourg’s outstanding 11½%/12½% senior PIK election notes and$754.8 million aggregate principal amount of the Intelsat Luxembourg 11¼% senior notes due 2017 (the “2017 Senior Notes”). -
On
April 23, 2013 , we completed our initial public offering of 22.2 million common shares and a concurrent offering of 3.5 million Series A mandatory convertible junior non-voting preferred shares (collectively, the “IPO”). The shares trade on theNew York Stock Exchange ; the common shares under the ticker symbol “I” and the preferred shares under the ticker symbol “I PR A.” Net proceeds received, after underwriting discounts and commissions, were approximately$550 million following exercise of the underwriters’ overallotment options in both offerings.
We used a portion of the proceeds from the stock offerings to prepay$138.2 million of indebtedness outstanding under ourIntelsat Jackson Holdings S.A. (“Intelsat Jackson”)$810.9 million senior unsecured credit agreement. In May, we used a portion of the remaining proceeds to fully redeem ourIntelsat Investments S.A. (formerlyIntelsat S.A. ) 6½% senior notes due 2013.
We incurred$77.7 million of one-time, pre-tax expenses related to the IPO (the “Total IPO Charge”), of which$21.3 million related to share-based and other compensation expense incurred upon consummation of the IPO (the “IPO-related Compensation Charges”). -
In
June 2013 , Intelsat Jackson issued$2.0 billion aggregate principal amount of 5½% senior notes due 2023 and$635.0 million aggregate principal amount of 65/8% senior notes due 2022 (the “2022 Jackson Notes” and collectively, the “June Intelsat Jackson Offerings”). The 2022 Jackson Notes were priced at 106.25 for an effective yield of 5.76%. -
Also in June, we used the net proceeds of the June Intelsat
Jackson Offerings, together with other available cash, to redeem
the remaining
$1.7 billion aggregate principal amount of the Intelsat Luxembourg 2017 Senior Notes, and to prepay all amounts outstanding (approximately$868 million principal amount) under Intelsat Jackson’s two senior unsecured credit agreements. -
In total, our debt retirement activities resulted in a pre-tax
early-extinguishment charge of
$366.8 million in the quarter endedJune 30, 2013 .
-
In
-
Intelsat’s average fill rate on our approximately 2,175 station-kept
transponders was 78 percent at
June 30, 2013 . No significant fleet changes were conducted during the period. -
Intelsat has no satellite launches planned for the balance of 2013. We have contracted withArianespace to launchIntelsat 30, the next satellite in our fleet program, in the second half of 2014.
Financial Results for the Three Months ended
On-Network revenue generally includes revenue from any services delivered via our satellite or ground network. Off-Network and Other revenue generally includes revenue from transponder services, Mobile Satellite Services (“MSS”) and other satellite-based transmission services using capacity procured from other operators, often in frequencies not available on our network. Off-Network and Other Revenue also includes revenue from consulting and other services and sales of customer premises equipment.
Total revenue for the three months ended
On-Network Revenue:
-
Transponder services—an aggregate increase of
$17.1 million , due in part to an$8.3 million net increase in revenue from network services customers based in theLatin America andCaribbean and theNorth America region, for use in wireless telecommunications infrastructure and enterprise networks, respectively. An additional$8.1 million of the increase reflects new revenue from growth in services sold to media customers largely in theLatin America andCaribbean , theAfrica andMiddle East , and theAsia-Pacific regions for DTH and programming-distribution applications. -
Managed services—an aggregate increase of
$8.1 million , largely due to a$6.5 million increase in revenue from network services customers for new broadband services for mobility applications, primarily in theEurope , theNorth America and theAsia-Pacific regions, and a$2.7 million increase in revenue from managed services sold to government customers. -
Channel—an aggregate decrease of
$4.8 million related to a continued decline due to the migration of international point-to-point satellite traffic to fiber optic cable, a trend that we expect will continue.
Off-Network and Other Revenue:
-
Transponder, MSS and other off-network services—an aggregate
decrease of
$4.1 million , primarily due to declines in sales of off-network transponder services for government applications and MSS. -
Satellite-related services—an aggregate decrease of
$1.1 million , primarily due to decreased revenue from government professional services and flight operations support for third-party satellites as compared to the second quarter of 2012.
Changes in direct costs of revenue, selling, general and administrative expenses, depreciation and amortization, income from operations, interest expense, net, and other significant income-statement items are described below.
-
Direct costs of revenue increased by
$1.0 million , or 1%, to$100.3 million for the three months endedJune 30, 2013 , as compared to the three months endedJune 30, 2012 . Excluding$2.4 million related to the IPO-related Compensation Charges, direct cost of revenue decreased$1.4 million , principally due to$4.7 million in lower cost of MSS and off-network fixed satellite services (“FSS”) capacity purchased primarily related to solutions sold to our government customer set and a decrease of$0.9 million in share-based compensation costs. These decreases were partially offset by an increase of$2.9 million in costs related to a joint venture and an increase of$1.5 million in expenses related to earth station operations. -
Selling, general and administrative expenses increased by
$71.8 million to $125.2 million for the three months endedJune 30, 2013 as compared to the three months endedJune 30, 2012 . Excluding$56.3 million in professional fees mainly associated with the termination of our monitoring fee agreement and$18.9 million related to the IPO-related Compensation Charges, selling, general and administrative expenses decreased$3.4 million , principally due to$4.8 million in lower professional fees and a decrease of$1.7 million in bad debt expense. These decreases were partially offset by an increase of$3.3 million in staff-related expenses, including share-based compensation costs. -
Depreciation and amortization expense decreased by
$1 .9 million to$186.7 million for the three months endedJune 30, 2013 , as compared to the three months endedJune 30, 2012 . This decrease was primarily due to a net decrease of$21.7 million in depreciation expense due to the timing of certain satellites becoming fully depreciated and changes in estimated remaining useful lives of certain satellites, a decrease of$2.4 million in amortization expense primarily due to changes in the expected pattern of consumption of amortizable intangible assets , largely offset by an increase of$22.7 million in depreciation expense resulting from the impact of satellites placed into service during 2012. -
Our income from operations decreased by
$25.9 million , or 9%, to$255.6 million for the three months endedJune 30, 2013 , compared to$281.5 million for the three months endedJune 30, 2012 , due primarily to the Total IPO Charge of$77.7 million , partially offset by a$20.3 million improvement in (gains) losses recognized on our derivative financial instruments for the three months endedJune 30, 2013 , as compared to the prior year, related to the net (gain) loss on our interest rate swaps, which reflects the change in fair value of the interest rate swaps, partially offset by the related interest expense accrued. For the three months endedJune 30, 2013 , we recorded a gain of$4.5 million , as compared to a loss on derivative financial instruments of$15.8 million for the three months endedJune 30, 2012 . -
Interest expense, net consists of the gross interest expense we incur
less the amount of interest we capitalize related to capital assets
under construction and less interest income earned. As of
June 30, 2013 , we also held interest rate swaps with an aggregate notional amount of$1 .6 billion to economically hedge the variability in cash flow on a portion of the floating-rate term loans under our senior secured credit facilities. The swaps have not been designated as hedges for accounting purposes. Interest expense, net decreased by$25.7 million , or 8%, to$301.7 million for the three months endedJune 30, 2013 , as compared to$327.4 million for the three months endedJune 30, 2012 . The decrease in interest expense, net was principally due to the following:-
a net decrease of
$30.8 million in interest expense as a result of our debt offerings, redemptions and credit facility amendments in 2012; and -
a net decrease of
$16.3 million in interest expense as a result of our debt offerings, prepayments and redemptions in 2013; partially offset by -
an increase of
$25.1 million resulting from lower capitalized interest of$9.8 million for the three months endedJune 30, 2013 , as compared to$34.9 million for the three months endedJune 30, 2012 , resulting from decreased levels of satellites and related assets under construction.
Non-cash items in interest expense, net were
$19.3 million for the three months endedJune 30, 2013 , primarily for amortization of deferred financing fees incurred as a result of new or refinanced debt and the amortization and accretion of discounts and premiums. -
a net decrease of
-
Loss on early extinguishment of debt was
$366.8 million for the three months endedJune 30, 2013 , as compared to$43.4 million for the three months ended June 30, 2012. The 2013 loss related to the repayment of debt in connection with various 2013 refinancings, redemptions, prepayments and offerings was primarily driven by a$311.2 million difference between the carrying value of the debt repurchased, redeemed or prepaid in the quarter and the total cash amount paid (including related fees), together with a write-off of$55.6 million of unamortized debt discounts and debt issuance costs.
The 2012 loss related to the repayment of debt in connection with the 2012 Intelsat Jackson tender offers and redemptions, and was primarily driven by a$39.5 million difference between the carrying value of the debt repurchased or redeemed and the total cash amount paid (including related fees), together with a write-off of$3.9 million of unamortized debt premium and debt issuance costs.
-
Other expense, net was
$3.2 million for the three months endedJune 30, 2013 , as compared to$1 .9 million for the three months endedJune 30, 2012 . -
Our benefit from income taxes was
$8.8 million for the three months endedJune 30, 2013 , as compared to a benefit of$6.8 million for the three months endedJune 30, 2012 . The difference was principally due to the recognition of previously unrecognized tax benefits related to the closing of anIRS audit of the 2008 and 2009 tax years for our subsidiary,Intelsat Holding Corporation , in the three months endedJune 30, 2013 , partially offset by higher earnings in certain taxable jurisdictions. -
Cash paid for income taxes, net of refunds, totaled
$4.2 million and$8.5 million for the three months endedJune 30, 2012 and 2013, respectively.
EBITDA, Adjusted EBITDA and Other Financial Metrics
EBITDA of
At
Revenue Comparison by Customer Set and Service Type |
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($ in thousands) |
||||||||||||||||
By Customer Set | ||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2012 | 2013 | |||||||||||||||
Network Services | $ | 292,453 | 46 | % | $ | 303,665 | 46 | % | ||||||||
Media | 212,136 | 33 | % | 220,526 | 34 | % | ||||||||||
Government | 124,961 | 20 | % | 122,390 | 19 | % | ||||||||||
Other | 9,118 | 1 | % | 7,222 | 1 | % | ||||||||||
$ | 638,668 | 100 | % | $ | 653,803 | 100 | % | |||||||||
By Service Type | ||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2012 | 2013 | |||||||||||||||
On-Network Revenues | ||||||||||||||||
Transponder services | $ | 480,803 | 75 | % | $ | 497,872 | 76 | % | ||||||||
Managed services | 67,205 | 11 | % | 75,303 | 12 | % | ||||||||||
Channel | 23,461 | 4 | % | 18,654 | 3 | % | ||||||||||
Total on-network revenues | 571,469 | 90 | % | 591,829 | 91 | % | ||||||||||
Off-Network and Other Revenues | ||||||||||||||||
Transponder, MSS and other off-network services | 55,388 | 9 | % | 51,311 | 8 | % | ||||||||||
Satellite-related services | 11,811 | 2 | % | 10,663 | 2 | % | ||||||||||
Total off-network and other revenues | 67,199 | 11 | % | 61,974 | 9 | % | ||||||||||
Total | $ | 638,668 | 100 | % | 653,803 | 100 | % | |||||||||
Free Cash Flow From (Used in) Operations
Free cash flow used in operations1 was
Financial Outlook 2013 with Updated Prepayments Guidance
Consistent with prior guidance, for the full year 2013
As previously announced, our 2013 capital expenditure guidance for the
three calendar years 2013 through 2015 (the “Guidance Period”) assumes
investment in nine satellites in the manufacturing or design phase
during the Guidance Period, including one destroyed in a launch failure
in
Consistent with prior guidance, we expect our capital expenditures to
range from
During the Guidance Period, we expect to receive significant customer
prepayments under our existing customer service contracts. In an effort
to balance our growth and delevering objectives, today we are updating
prepayment guidance to reflect only amounts currently contractually
committed. Significant prepayments are currently expected to range from
The annual classification of capital expenditure and prepayments could be affected by the timing of achievement of contract, satellite manufacturing, launch and other milestones.
- - - - - - - - - - - - - - - - - - -
1In this release, financial measures are presented both in accordance with GAAP and also on a non-GAAP basis. EBITDA, Adjusted EBITDA, free cash flow from (used in) operations and related margins included in this release are non-GAAP financial measures. Please see the consolidated financial information below for information reconciling non-GAAP financial measures to comparable GAAP financial measures.
Conference Call Information
About
Intelsat Safe Harbor Statement: Some of the statements in this news
release constitute "forward-looking statements" that do not directly or
exclusively relate to historical facts. The forward-looking statements
made in this release reflect
INTELSAT S.A. |
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UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||
($ in thousands, except per share amounts) |
||||||||||
Three Months Ended
June 30, 2012 |
Three Months Ended
June 30, 2013 |
|||||||||
Revenue | $ | 638,668 | $ | 653,803 | ||||||
Operating expenses: | ||||||||||
Direct costs of revenue (excluding depreciation and amortization) | 99,307 | 100,278 | ||||||||
Selling, general and administrative | 53,434 | 125,217 | ||||||||
Depreciation and amortization | 188,628 | 186,745 | ||||||||
(Gains) losses on derivative financial instruments | 15,756 | (4,457 | ) | |||||||
Gain on satellite insurance recoveries | - | (9,618 | ) | |||||||
Total operating expenses | 357,125 | 398,165 | ||||||||
Income from operations | 281,543 | 255,638 | ||||||||
Interest expense, net | 327,379 | 301,685 | ||||||||
Loss on early extinguishment of debt | (43,383 | ) | (366,794 | ) | ||||||
Other expense, net | (1,906 | ) | (3,184 | ) | ||||||
Loss before income taxes | (91,125 | ) | (416,025 | ) | ||||||
Benefit from income taxes | (6,797 | ) | (8,759 | ) | ||||||
Net loss | (84,328 | ) | (407,266 | ) | ||||||
Net income attributable to noncontrolling interest | (382 | ) | (1,039 | ) | ||||||
Net loss attributable to Intelsat S.A. | $ | (84,710 | ) | $ | (408,305 | ) | ||||
Basic and diluted net loss per share attributable to Intelsat S.A. | $ | (1.02 | ) | $ | (4.19 | ) | ||||
INTELSAT S.A. | ||||||
UNAUDITED RECONCILIATION OF NET LOSS TO EBITDA | ||||||
($ in thousands) | ||||||
Three Months | Three Months | |||||
Ended | Ended | |||||
June 30, | June 30, | |||||
2012 | 2013 | |||||
Net loss | $ (84,328) | $ (407,266) | ||||
Add (Subtract): | ||||||
Interest expense, net | 327,379 | 301,685 | ||||
Loss on early extinguishment of debt | 43,383 | 366,794 | ||||
Benefit from income taxes | (6,797) | (8,759) | ||||
Depreciation and amortization | 188,628 | 186,745 | ||||
EBITDA | $ 468,265 | $ 439,199 | ||||
EBITDA Margin | 73% | 67% | ||||
Note:
EBITDA consists of earnings before net interest, loss on early extinguishment of debt, taxes and depreciation and amortization. Given our high level of leverage, refinancing activities are a frequent part of our efforts to manage costs of borrowing. Accordingly, we consider (gain) loss on early extinguishment of debt an element of interest expense. EBITDA is a measure commonly used in the FSS sector, and we present EBITDA to enhance the understanding of our operating performance. We use EBITDA as one criterion for evaluating our performance relative to that of our peers. We believe that EBITDA is an operating performance measure, and not a liquidity measure, that provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. However, EBITDA is not a measure of financial performance under U.S. GAAP, and our EBITDA may not be comparable to similarly titled measures of other companies. EBITDA should not be considered as an alternative to operating income (loss) or net income (loss), determined in accordance with U.S. GAAP, as an indicator of our operating performance, or as an alternative to cash flows from operating activities, determined in accordance with U.S. GAAP, as an indicator of cash flows, or as a measure of liquidity.
INTELSAT S.A. | ||||||||||
UNAUDITED RECONCILIATION OF NET LOSS TO | ||||||||||
ADJUSTED EBITDA | ||||||||||
($ in thousands) | ||||||||||
Three Months | Three Months | |||||||||
Ended | Ended | |||||||||
June 30, | June 30, | |||||||||
2012 | 2013 | |||||||||
Net loss | $ | (84,328 | ) | $ | (407,266 | ) | ||||
Add (Subtract): | ||||||||||
Interest expense, net | 327,379 | 301,685 | ||||||||
Loss on early extinguishment of debt | 43,383 | 366,794 | ||||||||
Benefit from income taxes | (6,797 | ) | (8,759 | ) | ||||||
Depreciation and amortization | 188,628 | 186,745 | ||||||||
EBITDA | 468,265 | 439,199 | ||||||||
Add (Subtract): | ||||||||||
Compensation and benefits | 2,371 | 18,445 | ||||||||
Management fees | 6,265 | 57,954 | ||||||||
(Gains) losses on derivative financial instruments | 15,756 | (4,457 | ) | |||||||
Non-recurring and other non-cash items | (668 | ) | (1,764 | ) | ||||||
Adjusted EBITDA | $ | 491,989 | $ | 509,377 | ||||||
Adjusted EBITDA Margin | 77 | % | 78 | % | ||||||
Note:
Adjusted EBITDA is not a measure of financial performance under U.S. GAAP and may not be comparable to similarly titled measures of other companies. Adjusted EBITDA should not be considered as an alternative to operating income (loss) or net income (loss), determined in accordance with U.S. GAAP, as an indicator of our operating performance, or as an alternative to cash flows from operating activities, determined in accordance with U.S. GAAP, as an indicator of cash flows, or as a measure of liquidity.
INTELSAT S.A. |
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CONSOLIDATED BALANCE SHEETS |
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($ in thousands, except share amounts) |
||||||||||
As of | As of | |||||||||
December 31, | June 30, | |||||||||
2012 | 2013 | |||||||||
(Unaudited) | ||||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 187,485 | $ | 95,792 | ||||||
Receivables, net of allowance of $23,583 in 2012 and $28,692 in 2013 | 282,214 | 284,854 | ||||||||
Deferred income taxes | 94,779 | 94,672 | ||||||||
Prepaid expenses and other current assets | 38,708 | 51,160 | ||||||||
Total current assets | 603,186 | 526,478 | ||||||||
Satellites and other property and equipment, net | 6,355,192 | 5,834,263 | ||||||||
Goodwill | 6,780,827 | 6,780,827 | ||||||||
Non-amortizable intangible assets | 2,458,100 | 2,458,100 | ||||||||
Amortizable intangible assets, net | 651,087 | 609,931 | ||||||||
Other assets | 417,454 | 414,606 | ||||||||
Total assets | $ | 17,265,846 | $ | 16,624,205 | ||||||
LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||||||||
Current liabilities: | ||||||||||
Accounts payable and accrued liabilities | $ | 178,961 | $ | 139,304 | ||||||
Taxes payable | 9,366 | - | ||||||||
Employee related liabilities | 46,590 | 33,557 | ||||||||
Accrued interest payable | 367,686 | 198,585 | ||||||||
Current portion of long-term debt | 57,466 | 56,598 | ||||||||
Deferred satellite performance incentives | 21,479 | 21,533 | ||||||||
Deferred revenue | 84,066 | 78,827 | ||||||||
Other current liabilities | 72,715 | 71,982 | ||||||||
Total current liabilities | 838,329 | 600,386 | ||||||||
Long-term debt, net of current portion | 15,846,728 | 15,350,921 | ||||||||
Deferred satellite performance incentives, net of current portion | 172,663 | 163,320 | ||||||||
Deferred revenue, net of current portion | 834,161 | 871,140 | ||||||||
Deferred income taxes | 286,673 | 290,278 | ||||||||
Accrued retirement benefits | 299,187 | 274,385 | ||||||||
Other long-term liabilities | 300,195 | 227,710 | ||||||||
Shareholders' deficit: | ||||||||||
Common shares (1) | 832 | 1,054 | ||||||||
5.75% Series A Mandatory Convertible Junior Non-Voting Preferred shares | - | 35 | ||||||||
Paid-in capital (1) | 1,519,429 | 2,089,250 | ||||||||
Accumulated deficit | (2,759,593 | ) | (3,175,702 | ) | ||||||
Accumulated other comprehensive loss | (118,428 | ) | (112,140 | ) | ||||||
Total shareholders' deficit | (1,357,760 | ) | (1,197,503 | ) | ||||||
Noncontrolling interest | 45,670 | 43,568 | ||||||||
Total liabilities and shareholders' deficit | $ | 17,265,846 | $ | 16,624,205 | ||||||
(1) Common shares and paid-in capital amounts reflect the retroactive impact of the Class A and Class B share reclassification into common shares and the share splits related to our Initial Public Offering.
INTELSAT S.A. |
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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(in thousands) |
||||||||||
Three Months | Three Months | |||||||||
Ended | Ended | |||||||||
June 30, 2012 | June 30, 2013 | |||||||||
Cash flows from operating activities: | ||||||||||
Net loss | $ | (84,328 | ) | $ | (407,266 | ) | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 188,628 | 186,745 | ||||||||
Provision for doubtful accounts | 3,833 | 2,103 | ||||||||
Foreign currency transaction loss | 3,337 | 2,773 | ||||||||
Loss on disposal of assets | - | 212 | ||||||||
Gain on satellite insurance recoveries | - | (9,618 | ) | |||||||
Share-based compensation | 1,097 | 18,281 | ||||||||
Deferred income taxes | (9,779 | ) | (2,517 | ) | ||||||
Amortization of discount, premium, issuance costs and related costs | 14,594 | 19,321 | ||||||||
Interest paid-in-kind | 3,979 | - | ||||||||
Loss on early extinguishment of debt | 43,383 | 366,794 | ||||||||
Unrealized (gains) losses on derivative financial instruments | 2,644 | (11,367 | ) | |||||||
Other non-cash items | 3,636 | 5,102 | ||||||||
Changes in operating assets and liabilities: | ||||||||||
Receivables | (6,448 | ) | (7,265 | ) | ||||||
Prepaid expenses and other assets | 11,655 | 20,722 | ||||||||
Accounts payable and accrued liabilities | 31,262 | (122,908 | ) | |||||||
Deferred revenue | 63,593 | 27,644 | ||||||||
Accrued retirement benefits | (11,541 | ) | (17,217 | ) | ||||||
Other long-term liabilities | (174 | ) | (8,654 | ) | ||||||
Net cash provided by operating activities | 259,371 | 62,885 | ||||||||
Cash flows from investing activities: | ||||||||||
Payments for satellites and other property and equipment (including capitalized interest) | (215,894 | ) | (169,054 | ) | ||||||
Proceeds from insurance settlements | - | 235,019 | ||||||||
Net cash provided by (used in) investing activities | (215,894 | ) | 65,965 | |||||||
Cash flows from financing activities: | ||||||||||
Repayments of long-term debt | (1,330,038 | ) | (6,715,609 | ) | ||||||
Repayment of notes payable to former shareholders | (367 | ) | (670 | ) | ||||||
Payment of premium on early extinguishment of debt | (39,475 | ) | (311,224 | ) | ||||||
Proceeds from issuance of long-term debt | 1,296,000 | 6,214,688 | ||||||||
Debt issuance costs | (19,444 | ) | (84,948 | ) | ||||||
Proceeds from initial public offering | - | 572,500 | ||||||||
Stock issuance costs | - | (26,377 | ) | |||||||
Principal payments on deferred satellite performance incentives | (3,337 | ) | (5,117 | ) | ||||||
Dividends paid to noncontrolling interest | (2,418 | ) | (2,306 | ) | ||||||
Net cash used in financing activities | (99,079 | ) | (359,063 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (3,337 | ) | (2,773 | ) | ||||||
Net change in cash and cash equivalents | (58,939 | ) | (232,986 | ) | ||||||
Cash and cash equivalents, beginning of period | 313,085 | 328,778 | ||||||||
Cash and cash equivalents, end of period | $ | 254,146 | $ | 95,792 | ||||||
Supplemental cash flow information: | ||||||||||
Interest paid, net of amounts capitalized | $ | 273,688 | $ | 410,228 | ||||||
Income taxes paid, net of refunds | 4,210 | 8,452 | ||||||||
Supplemental disclosure of non-cash investing activities: | ||||||||||
Accrued capital expenditures | $ | 61,083 | $ | 20,009 | ||||||
INTELSAT S.A. | ||||||||||
UNAUDITED RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES | ||||||||||
TO FREE CASH FLOW FROM (USED IN) OPERATIONS | ||||||||||
($ in thousands) | ||||||||||
Three Months Ended | Three Months Ended | |||||||||
June 30, | June 30, | |||||||||
2012 | 2013 | |||||||||
Net cash provided by operating activities | $ | 259,371 | $ | 62,885 | ||||||
Payments for satellites and other property and equipment (including capitalized interest)
|
(215,894 | ) | (169,054 | ) | ||||||
Free cash flow from (used in) operations | $ | 43,477 | $ | (106,169 | ) | |||||
Note:
Free cash flow from (used in) operations consists of net cash provided
by operating activities, less payments for satellites and other property
and equipment (including capitalized interest). Free cash flow from
(used in) operations excludes proceeds resulting from settlement of
insurance claims, and is not a measurement of cash flow under GAAP.
Source:
Intelsat
Dianne VanBeber
Vice President, Investor Relations
and Communications
+1 202-944-7406
dianne.vanbeber@intelsat.com